Bloomberg Slowdown signs - Chinese power plants slash coal use by 17%

Slowdown signs - Chinese power plants slash coal use by 17%
Bloomberg reported that power plants in China, poised to post a surplus in electricity supply this year, burned 17% less coal last month compared with a year earlier because of slower economic growth.

Mr David Fang director at the China Coal Transport and Distribution Association said that daily coal use at generators linked to the network of State Grid Corporation of China, the nation’s dominant electricity supplier, slumped to 1.69 million tonnes.

Mr Fang said that “Power demand remained weak last month, especially as factories shut during the Lunar New Year holidays.”

Mr Fang said that electricity generation fell 6.7% nationwide in the H1 of January from a year earlier. He said that coal fired power output plunged 10% during the same period.

State Grid statistics cited Mr Fang as saying that coal stockpiles at power plants more than doubled to 36.4 million tonnes as of January 31st from the year earlier period.

Mr Hou Yong director of information at the China Electricity Council said that China may face an oversupply of electricity this year as demand slows while new generating projects are being built to help stimulate the economy. Gross domestic product expanded by 6.8% in the last quarter, the weakest pace since 2001.

A government backed survey showed that factory output contracted for a fourth month in January as exports fell because of the global recession, cutting electricity consumption.

According to the coal distribution group, weekly coal prices at Qinhuangdao port, a domestic benchmark, dropped about 3% in the seven days to February 9. According to information provided by the coal association, the price of coal with an energy value of 5,500 kilocalories a kilogram at Qinhuangdao dropped to CNY 585 tonnes as of February 9 from NY 605 tonnes a week earlier.

(Sourced from Bloomberg)